Germany Residential Real Estate Market Size
|Base Year For Estimation||2022|
|Market Size (2023)||USD 328.15 Billion|
|Market Size (2028)||USD 381.52 Billion|
|CAGR (2023 - 2028)||3.06 %|
*Disclaimer: Major Players sorted in no particular order
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Germany Residential Real Estate Market Analysis
The Germany Residential Real Estate Market size in terms of transaction value is expected to grow from USD 328.15 billion in 2023 to USD 381.52 billion by 2028, at a CAGR of 3.06% during the forecast period (2023-2028).
- Sales of homes in Germany reached EURO 337 billion (USD 328.99 billion) in 2021, a 14.5% annual growth and twice as much as it did ten years earlier. During the real estate market boom that followed the Covid lockdowns, people sold their apartments to purchase homes in more remote locations, but it was also a catch-up move. With a potential slowdown and decline, real estate in Germany could not be a good investment. However, a lot will depend on future central bank policies and the health of the energy market.
- Germany's housing market remains vibrant amid improving economic conditions. The average price of apartments rose by 12% in the fourth quarter of 2021 compared to the same period of the previous year and denoted the most significant price increase since records began in 2000. The price increase can be seen since the pandemic started. It increased by 8.25% till Q3 2021, following Y-o-Y rises of 8.38% in Q2 2021, 7.95% in Q1 2021, 8.8% in Q4 2020, and 7.38% in Q3 2020.
- At the end of the first half of 2021, the transaction volume for residential properties and portfolios in the German residential investment market totaled around EUR 10.3 billion (around 57,300 dwellings and 257 transactions), with around EUR 3.9 billion of this sum changing hands in the second quarter (21,900 houses). The transaction volume is significantly less than in the first three months (EUR 6.4 billion; 35,900 dwellings). Nonetheless, the five-year average transaction volume between April and the end of June was exceeded by double digits (+20%), and this is also the case (albeit in single digits) when compared to the corresponding quarter of the previous year (+8%).
- German rental markets are regulated in areas with competitive housing markets. The state government must approve the conversion of rental apartments into owner-occupied apartments. The "rent brake," which has been in place, limits rent increases by landlords to 10% over the local market level. The green transition is one trend that will also affect the German real estate market in the future. Since the building sector accounts for roughly 16% of all greenhouse gas emissions in Germany, the German government is actively encouraging energy-efficient homes. Five billion euros more will be made available under the "Immediate Action Program 2022" to promote the construction of new, energy-efficient structures, including social housing, and the renovation of existing ones. Political support, however, might also present a problem.
Germany Residential Real Estate Market Trends
This section covers the major market trends shaping the Germany Residential Real Estate Market according to our research experts:
Strong Demand and Rising Construction Activities to Drive the Market
The demand remained strong in 2021 for the residential sector, buoyed by low-interest rates, urbanization, and healthy household finances. In recent years, the migration crisis and strong economic growth have added to the already strong demand in the country. Despite the pandemic, residential construction activity continues to rise. In the first three quarters of 2021, dwelling permits rose by 4.8% Y-o-Y to 282,420 units, following annual growth of 2.2% in 2020, according to the Federal Statistical Office. Consequently, foreseeable structural changes, such as demographic effects, are also perceived as important drivers of demand. Most recently, the supply side was the main obstacle to further growth. However, the political uncertainty regarding new government constellations and the high investment pressure of many market participants have tempted some portfolio holders to bring products to the market in the second half of the year.
The status of the public finances has a significant impact on civil engineering, and infrastructure investment is crucial. Due to decreasing business investment in commercial, retail, and office buildings, the non-residential segment's performance has remained modest. Over the past twelve months, most German construction companies have reported stable or marginally better results. Given the benign demand environment, the prognosis for profit margins is stable for the time being, and price wars are being avoided. But persistent material shortages and unstable input prices continue to be a problem. Without contract escalation clauses, builders find it challenging to pass price hikes on to clients. Future profit margins may suffer as a result.
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Rising House Prices in Germany Affecting Demand in the Market
A price increase of 14.5% was recorded for houses and apartments in Germany's seven largest cities: Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart, and Dusseldorf. Prices have been skyrocketing in cities; the cost of buying a house has also been increasing in rural areas. In densely populated rural areas, the price of single and two-family houses rose by 12% in the third quarter of 2021, compared to the same period last year. The cost of condominiums in these areas increased by 12.3%. In less densely-populated rural areas, prices for single and two-family homes rose by 15.5%, while the price of condominiums rose by 11.2%.
Experts have identified several reasons why house prices continue to rise so rapidly. Over the past decade, low-interest rates, increasing demand, a lack of investment opportunities, and a strong economy have contributed to Germany's rising house prices. Construction cost has also increased significantly, with prices rising for building materials such as wood, concrete, and steel. The construction industry is facing labour shortages.
Germany Residential Real Estate Industry Overview
The Germany residential real estate market is fragmented in nature and has become increasingly competitive. The increasing spending on infrastructure, new government initiatives to drive investments, and new project announcements are expected to bring an overall development in the real estate sector, which may further enhance the interest of more investors. Some of the major players in Germany include Vonovia SE, Deutsche Wohnen SE, SAGA Hamburg, LEG Immobilien SE, and Consus Real Estate.
Germany Residential Real Estate Market Leaders
Deutsche Wohnen SE
SAGA Siedlungs-Aktiengesellschaft Hamburg
LEG Immobilien SE
Consus Real Estate
*Disclaimer: Major Players sorted in no particular order
Germany Residential Real Estate Market News
- March 2022: Allianz Real Estate, on behalf of various Allianz Group companies, in a EUR 1.3 billion project, will construct and develop several high-end office properties in Germany's top four cities in collaboration with real estate developer EDGE and Bayerische Versorgungskammer (BVK). Throughout each stage of development, the program will be jointly managed by Allianz Real Estate and EDGE. Following completion, Allianz Real Estate will assume control of each asset's management.
- August 2022: Home & Co is a brand-new student housing concept introduced in Germany by TPG Real Estate Partners (TREP) and Round Hill Capital. After the first acquisitions and the successful stabilization of the portfolio over the last two years, the new brand symbolizes the platform's next strategic step. TREP, Round Hill Capital, and the firm management will run 15 buildings totaling more than 2600 units in significant German cities under the Home & Co brand.
Germany Residential Real Estate Market Report - Table of Contents
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Market Opportunities
4.5 Industry Attractiveness - Porter's Five Forces Analysis
4.5.1 Bargaining Power of Suppliers
4.5.2 Bargaining Power of Buyers/Consumers
4.5.3 Threat of New Entrants
4.5.4 Threat of Substitute Products
4.5.5 Intensity of Competitive Rivalry
4.6 Government Initiatives and Regulations for the Residential Real Estate Sector
4.7 Residential Real Estate Buying Trends - Socio-economic and Demographic Insights
4.8 Insights into Size of Real Estate Lending and Loan to Value Trends
4.9 Insights into Interest Rate Regime for General Economy and Real Estate Lending
4.10 Insights into Rental Yields in the Residential Real Estate Segment
4.11 Insights into Capital Market Penetration and REIT Presence in Residential Real Estate
4.12 Insights into Affordable Housing Support Provided by Government and Public-private Partnerships
4.13 Insights into Real Estate Tech and Startups Active in the Real Estate Segment (Broking, Social Media, Facility Management, and Property Management)
4.14 Impact of COVID-19 on the Market
5. MARKET SEGMENTATION
5.1 By Type
5.1.1 Villas and Landed Houses
5.1.2 Condominiums and Apartments
5.2 By Key Cities
5.2.5 Rest of Germany
6. COMPETITIVE LANDSCAPE
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 Vonovia SE
6.2.2 Deutsche Wohnen SE
6.2.3 SAGA Siedlungs-Aktiengesellschaft Hamburg
6.2.4 LEG Immobilien SE
6.2.5 Consus Real Estate
6.2.8 Residia Care Holding GmbH & Co.
6.2.9 Wohnungsbaugenossenschaft Musikwinkel eG (WBG)
6.2.10 ABG Frankfurt Holding*
- *List Not Exhaustive
7. FUTURE OF THE MARKET
Germany Residential Real Estate Market Research FAQs
How big is the Germany Residential Real Estate Market?
The Germany Residential Real Estate Market size is expected to reach USD 328.15 billion in 2023 and grow at a CAGR of 3.06% to reach USD 381.52 billion by 2028.
What is the current Germany Residential Real Estate Market size?
In 2023, the Germany Residential Real Estate Market size is expected to reach USD 328.15 billion.
Who are the key players in Germany Residential Real Estate Market?
Vonovia SE, Deutsche Wohnen SE, SAGA Siedlungs-Aktiengesellschaft Hamburg, LEG Immobilien SE and Consus Real Estate are the major companies operating in the Germany Residential Real Estate Market.
Residential Real Estate in Germany Industry Report
Statistics for the 2023 Residential Real Estate in Germany market share, size and revenue growth rate, created by Mordor Intelligence™ Industry Reports. Residential Real Estate in Germany analysis includes a market forecast outlook to 2028 and historical overview. Get a sample of this industry analysis as a free report PDF download.